Nebraska renewable energy tax credit bill sparks debate

LINCOLN, Neb. (AP) - An effort to lure more wind farms to Nebraska sparked a debate Tuesday among lawmakers, including some who questioned the use of state tax credits to help the industry.

Supporters argued that the tax measure in the Legislature would help Nebraska compete with other states that are seeking wind energy.

The measure by Sen. Jeremy Nordquist of Omaha would expand an existing tax credit for new facilities. Nordquist said his bill would help align Nebraska with states such as Oklahoma, Iowa and Kansas that offer richer incentives. Nebraska hasn’t yet done enough to attract developers, he said.

“Everyone in the breadbasket of the Midwest has the roughly the same wind-energy potential,” Nordquist said. “The question is who is incentivizing it more. If we don’t get in the game in the next five years ... the opportunity is going to pass us by.”

Nordquist said the wind farms would help ease pressure on property taxes by giving counties another revenue source, while creating jobs and helping Nebraska-based manufacturers.

The bill could also apply to producers of solar, biomass and other renewable energies. Sen. Matt Williams of Gothenburg said the tax credit could help the development of local solar-energy projects planned for his hometown and Lexington.

“It’s a great hedge against the future of what they believe to be rising energy costs,” he said.

Sen. Ken Schilz of Ogallala said wind farms have helped revive small towns that welcomed them.

“You see jobs for rural areas that fit in with the community,” he said. “You see huge opportunities to reduce property taxes. In counties where there is development, it really is significant.”

But opponents questioned whether the state would see a direct benefit from such projects.

Sen. Paul Schumacher of Columbus criticized the proposed use of transferable tax credits for wind farms. The transferable credits could be sold other companies at a discount, allowing the wind company to generate cash while the purchasing company lowers its tax liability.

Schumacher submitted an amendment that would allow companies to sell their tax credits at only a maximum 3 percent discount.

If a wind farm sold its $1 million tax credit to another company for $850,000, Schumacher said, the state would lose out on $150,000 that it otherwise would have collected. Some of that money would likely go to a middleman who helped facilitate the sale.

“These tax credits should not be subsidies for brokers,” Schumacher said.

Nordquist said such discounts are critical for small wind farms, which sell their tax credits to help finance their projects.

The proposal advanced by the Revenue Committee would allow companies a 1-cent tax credit for every kilowatt-hour generated for the first two years. The credit would shrink to 0.6 cents per kilowatt-hour over 10 years, after which it would end.

Wind-energy companies could also turn down that option in favor of a one-time tax credit totaling 30 percent of their construction costs, up to $2 million.

Nebraska ranks as one of the nation’s biggest wind-producing states, but 26th in the energy it could produce with equipment currently installed. It lags behind neighboring states Iowa, South Dakota, Wyoming, Colorado and Kansas.